Which of the Following Statements Is (Are)true Regarding the Variance

question 79

Multiple Choice

Which of the following statements is (are) true regarding the variance of a portfolio of two risky securities?

• A)The higher the coefficient of correlation between securities,the greater the reduction in the portfolio variance.
• B)There is a linear relationship between the securities' coefficient of correlation and the portfolio variance.
• C)The degree to which the portfolio variance is reduced depends on the degree of correlation between securities.
• D)A and B.
• E)A and C.

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